How Are Disputes Over Ambiguous Terms In A Partnership Agreement Resolved?
Commercial disputes are complicated—especially so when the parties to the dispute are business partners. A partnership agreement is supposed to bring clarity to the relationship. What happens if the partnership agreement has ambiguous terms? Within this article, our West Palm Beach partnership dispute lawyer explains how disputes over ambiguous terms are resolved in Florida
Background: Florida Courts Look to Uphold the Bargained-for Partnership Agreement
While Florida has partnership laws, the relationships between business partners is primarily governed by their partnership agreement. In other words, the terms and conditions of the partnership should be laid out within the agreement. Assuming the partnership agreement is otherwise valid, courts in Florida will look to uphold the terms in a between the parties. Of course, if the contract is ambiguous—or there is otherwise a dispute over its implications—it may be up to a court to interpret the meaning of the agreement.
Know the Principles for Resolving Contract Ambiguities
The Cornell Legal Information Institute explains that contract ambiguity exists when a reasonable person “could interpret the language in more than one way.” Ideally, a partnership agreement will not have ambiguities—but it does happen in some cases. How are contract ambiguities resolved by a Florida court? Here are the key principles that courts use in contract interpretation:
- Plain Language Comes First: The court will always start by assessing if an ambiguity actually exists at all. The plain language of the agreement will generally hold if there is no genuine ambiguity.
- Industry Language/Implied Meaning/Other Parts of the Contract: If the plain meaning of the contract terms are ambiguous, courts will consider industry-specific language, implied meanings, and other parts of the contract.
- Outside Evidence: Outside evidence—known as parol evidence—is generally not allowed in contract disputes. However, there is an exception for genuine ambiguities. If a genuine ambiguity remains, parties can present outside evidence to show the true meaning.
Alternative Dispute Resolution (ADR) is Often the Best Approach in Partnership Disputes
Alternative Dispute Resolution (ADR) is a term used to describe a range of methods for resolving disputes outside of the traditional court system, including mediation and arbitration. There are some significant benefits to using ADR to resolve conflicts, especially when it comes to partnership disputes. Indeed, ADR can be a faster, cheaper, and less adversarial way to resolve conflicts. In many cases, ADR can help partners to maintain their relationship and avoid the time and expense of going to court. Further, it can allow for more flexibility and creativity in finding solutions. Of course, there are exceptions. Litigation may be necessary to protect your rights in some partnership disputes.
Contact Our West Palm Beach Partnership Lawyer Today
At Pike & Lustig, LLP, our West Palm Beach business attorneys have extensive experience representing business partners in legal disputes. If you have any questions about ambiguous terms in a partnership agreement, we are here to help protect your rights. Contact us today to set up your fully confidential appointment with an attorney. From our West Palm Beach office, Miami office, and Wellington office, we provide partnership dispute representation throughout Southeastern Florida.